Analysis of the Labour Economy

Transcription

1 217 Analysis of the Labour Economy Challenges for Promoting Innovations and Realizing Work-Life Balance Summary September 217 Ministry of Health, Labour and Welfare

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3 217 Analysis of the Labour Economy Challenges for Promoting Innovations and Realizing Work-Life Balance Outline

4 Part I: Trends and Features of the Labour Economy While the Japanese economy is gradually recovering, employment situation is steadily improving: the FY216 average unemployment rate was 3.%, the lowest rate in 22 years since FY1994, and the effective ratio of job offers to applicants was 1.39 times, the highest ratio in 26 years since FY199 and so forth. [Fig. 1-1, Fig. 1-2] [Trends of regions and regular/non-regular employment] By region, the effective ratio of job offers to applicants reached a level exceeding 1. times in all prefectures for the first time in history since the statistics have been collected. [Fig. 1-3] For people younger than 55, the number of regular employment workers has increased for two consecutive years, and in 216 it increased to 28,5,, exceeding the rate of increase of that of non-regular employment workers. [Fig. 1-4] The rate of involuntary non-regular employment workers has decreased from the same quarter of the previous year for 13 consecutive quarters since the quarter of January to March 214. [Fig. 1-5] [Trends of wages] The wages of full-time workers have increased for four consecutive years since 213, and the hourly wage of part-time workers has been on an increasing trend for six consecutive years since 211, an increase of 67 yen from 21 to 1,84 yen in 216. [Fig. 1-6] i

5 Fig. 1-1 Japanese economy is gradually recovering (Change from the previous year %) Both the real and nominal 6 GDP growth rates rose for 5 Real GDP growth rate consecutive years Fig. 1-2 Unemployment rate and effective ratio of job offers to applicants are steadily improving (Times) Nominal GDP growth rate Unemployment rate (right axis) Effective ratio of job offers to applicants Ratio of new job offers to applicants Effective ratio of job offers to applicants for regular employees (Year/Month) (Times) Fig. 1-3 Effective ratio of job offers to applicants exceeded 1. times nationwide (216) Exceeded 1. times in all regional blocks/prefectures 1.24 Fig. 1-4 Regular employment workers increased for 2 consecutive years (younger than 55) (1, persons) (1, persons) 2,9 2,85 2,8 2,75 Regular employment workers Non-regular employment workers (right axis) 1,37 2, ,35 1,3 1,25 1, Fig. 1-6 Wages of full-time workers increased for 4 consecutive years and hourly wage of part-time workers increased for 6 consecutive years (1, yen) (Yen) 42 Increased for 6 1,84 1,1 consecutive years Hourly wage of part-time workers (right axis) , Fig. 1-5 Percentage of involuntary nonregular employment workers decreased (1, persons) Decreased from the same 5 quarter of the previous year for consecutive quarters 45 Number of involuntary non-regular employment workers (right axis) 1,17 Monthly wage of full-time workers 4.1 Increased for 4 consecutive years Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ 1, (Year/Quarter) (Note) The numerical values in Fig. 1-3 are based on the place of employment. ii

6 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan [Current status of innovations in Japan] When compared internationally, the current status of innovations in Japan is at a low level for both manufacturing and service industries. [Fig. 2-1] In order to promote the realization of innovations, active capital investment in R&D and development of competent human resources (specialized human resources) are important. [Fig. 2-2] [Challenges for promoting innovation activities] In Japan, investments in R&D and development of new products are at a low level, and active investments in these fields are important for realizing innovations. [Fig. 2-3] In order to realize innovations, effective utilization of specialized human resources by conducting personnel evaluation based on the R&D results, etc. is important. [Fig. 2-4] [Awareness of AI utilization and impacts of changes in industrial structure on employment] Many companies utilize AI to make the existing work more efficient and less labour intensive, but only a few utilize it to create new added values. [Fig. 2-5] While workers engaged in the occupations mainly involving routine work are decreasing due to changes in industrial structure, including the advancement of AI, etc., those engaged in technical work helping to create new added values are increasing. The impacts of AI on employment are therefore considered to vary depending on the occupations, and thus efforts need to be made in understanding actual situations in the future. [Fig. 2-6] (*) AI refers to Artificial Intelligence. iii

7 Fig. 2-1 Percentage of realization of innovations is low when compared internationally Manufacturing industry Service industry All industries (Motives for capital investments) Fig. 2-3 Investments in R&D and product development are at a low level Capacity enhancement New/advanced products 6.9 Rationalization/ labour saving 3.7 R&D 2.4 Maintenance/repair 17. Others Fig. 2-5 Many companies intend to utilize AI for the existing work, but only a few intend to utilize it to create new added values Germany U.K. France U.S.A. Japan 199s 2s Fig. 2-2 R&D and utilization of competent human resources are challenges for innovations R&D Acquisition of advanced machines, etc. 33. Education/training for employees Promoting innovation activities 7. Lack of competent employees Pursuit of immediate sales/profits Obstructing innovation activities Limited technological abilities and know-how High (Rate of increase of the probability of realization of innovations) Low Fig. 2-4 Reviewing organizational structures within companies focused on achievements is important 5 Positive impacts on the realization of innovations 18.3 Personnel evaluation based on the R&D results 9.7 Executives originated from R&D sections Negative impacts on the realization of innovations Fig. 2-6 Impacts of changes in industrial structure, including the advancement of AI, etc., on employment vary depending on occupations (Increase and decrease of the number of workers till 23 1, persons) Occupations requiring techniques Occupations requiring human added values Others, including occupations mainly involving routine work, etc (Note 1) The realization of innovations is defined as the development of new products/services, introduction of new production/sales methods, and creation of new added values through the introduction of new business management methods. (Note 2) The occupational categories in Fig 2-6 are provided by the MHLW, taking into consideration OECD (216) The Risk of Automation for Jobs in OECD Countries, etc. -.7 Enhancement of researchers authority -3.9 Re-employment of retired researchers iv

8 Part II Chapter 2: Changes in Environment Surrounding Working Style and Realization of Work-Life Balance [General situation of a work-life balance in Japan] Although the percentage of workers working long hours of 6 or more per week is on a decreasing trend, it still remains at a level exceeding 1%. In addition, the percentage of workers working long hours in Japan is high when compared internationally. [Fig. 3-1] Large percentages of both males and females, mainly in double-income households, are stressed in their attempts at balancing work and family, and enhancement of efforts to realize a work-life balance is a challenge. [Fig. 3-2] [Effects of promotion of a work-life balance and status of efforts of companies] Although many companies are working towards reducing overtime hours, those actually achieving positive results are limited, and thus exercising more ingenuity is needed. [Fig. 3-3] In order to make efforts more effective in achieving a work-life balance, placing a high value on performing work in shorter hours and reviewing organizational structures are important. [Fig. 3-4] [Prevalence of working style without being employed] Working style without being employed are expected to prevail in the future. While such a way of working is considered effective in achieving a work-life balance, there are issues concerning income and skill development, etc. It is required to discuss how to respond to such working style in the future. [Fig. 3-5, Fig. 3-6] v

9 Fig. 3-1 More than 1% of workers working at least 6 hours per week remain, and the ratio of workers working long hours is high when compared internationally Percentage of workers working at least 6 hours per week among those working at least 35 hours per week Fig. 3-3 Approx. half of companies reduced working hours by efforts to reduce overtime No (6.8%) No answer (.6%) Yes (92.6%) Percentage of employees working at least 5 hours per week (right axis) 5 Reduced Japan U.S.A. OECD average No change (including not sure ) (Effectiveness (actually reduced or not)) 45.9 (Reasons for satisfaction with working style without being employed) Fig. 3-5 Working style without being employed are effective for realizing a work-life balance 55.3 Can freely choose desirable work Can spend time with one s family / for child care and nursing No annoying human relations Short working hours/ commuting time Can choose the place to work (Percentage of people being stressed from their attempts at balancing work and family) Fig. 3-2 Large percentages of both males and females, mainly in double-income households, are stressed from their attempts at balancing work and family Males 71.5 Females 7.4 Wife is a regular employee 65.8 Wife is not working (full-time housewife) 78.9 Person herself is a regular employee Total Males Females 63.4 Person herself is not working (full-time housewife) (Difference between efforts that workers consider effective in reducing overtime and efforts actually taken) Fig. 3-4 Placing a high value on hours worked and reviewing work distribution are effective in reducing overtime Placing a high value on performing high quality work in shorter hours 18.7 Establishing a system that allows others to work in substitution when the persons in charge are absent Prohibiting meetings outside of office hours Systems in which superiors who have reduced long working hours of their subordinates are highly evaluated 15.9 Providing guidance to superiors who have allowed long working hours (Reasons for dissatisfaction with working style without being employed) Fig. 3-6 Issues concerning income and skill development exist with working style without being employed Income (no pay raise/unstable income, etc.) 31.4 Cannot develop skills/ unclear future prospects Cannot freely choose desirable work Work fluctuation Long working hours/commuting time vi

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11 217 Analysis of the Labour Economy Challenges for Promoting Innovations and Realizing Work-Life Balance Overview

12 Part I: Trends and Features of the Labour Economy Employment situation [1] While the Japanese economy is gradually recovering, employment situation is steadily improving: the FY216 average unemployment rate was 3.%, the lowest rate in 22 years since FY1994, and the effective ratio of job offers to applicants was 1.39 times, the highest ratio in 26 years since FY199 and so forth. By region, the effective ratio of job offers to applicants increased in all regional blocks and reached a level exceeding 1. times in all prefectures. 4 Transition of the real/nominal GDP growth rate (Change from the previous year %) 6 Real GDP growth rate Both the real and nominal GDP growth rates rose for 5 consecutive years Unemployment rate/effective ratio of job offers to applicants (Times) Unemployment rate (right axis) Ratio of new job offers to applicants (Times) Effective ratio of job offers to applicants by region Effective ratio of job offers to applicants Nominal GDP growth rate Exceeded 1. times in all regional blocks/prefectures Effective ratio of job offers to 2.8 applicants for regular employees (Year/Month) Source: Prepared based on Report on Employment Service, MHLW (middle figure and right figure); System of National Accounts, Cabinet Office (left figure); and Labour Force Survey, Statistics Bureau (MIC) (middle figure) 1

13 Part I: Trends and Features of the Labour Economy Employment situation [2] For people younger than 55, the number of regular employment workers has increased for two consecutive years, and in 216 it increased to 28,5,, exceeding the rate of increase of that of non-regular employment workers. The rate of involuntary non-regular employment workers has decreased from the same quarter of the previous year for 17 consecutive quarters, and the rate of transfer from non-regular employment to regular employment has increased for 17 consecutive quarters since the quarter of January to March 213. (1, persons) 3,1 3, 2,9 2,8 Transition of the number of employees by employment status (younger than 55) Regular employment workers (1, persons) 1,5 1,4 1,37 1,3 2,85 1, Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ (1, persons) 3 Transition of the ratio of involuntary non-regular employment workers Number of involuntary non-regular employment workers (right axis) (1, persons) Decreased from the same quarter of the previous year for 13 consecutive quarters (Year/Quarter) Transition of transfer to regular employment (age 15-54) Annual average ,7 Non-regular employment workers (right axis) 1, , , Source: Prepared based on Labour Force Survey (left figure); and Labour Force Survey (Detailed Tabulation) (upper right figure and lower right figure), Statistics Bureau (MIC) (Note) Transfer to regular employment in the lower right figure indicates the number calculated by subtracting the Number of persons transferred from regular to non-regular employment from the Number of persons transferred from non-regular to regular employment Continue to be positive for 17 consecutive quarters Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ (Year/Quarter) 2

14 Part I: Trends and Features of the Labour Economy Trends of wages Nominal wages in FY216 increased for three consecutive years mainly due to the increase in full-time workers' scheduled wages. Nominal wages of full-time workers have been increasing for four consecutive years since 213. The hourly wage of part-time workers has also increased for six consecutive years since 211, an increase of 67 yen from 21 to 1,84 yen. Transition of wages (1, yen) Transition of wages of full-time workers (Percentage change %) Contribution of the ratio of part-time workers Contribution of the total sum of cash earnings of part-time workers Contribution of the special wages of full-time workers Contribution of the non-scheduled wages of full-time workers Contribution of the scheduled wages of full-time workers Increased for 4 consecutive years (yen) 1,1 1,5 1, 982 1,9 Hourly wage of part-time workers 1,53 1,39 1,28 1,19 1,17 1,2 1,68 1,84 Percentage change from the previous year of the total sum of cash earnings of all workers 95 Increased for 6 consecutive years (FY) Source: Prepared based on Monthly Labour Survey, MHLW 3

15 Part II: Promotion of Innovations and Challenges for Realizing Work-Life Balance [Current status in Japan] Declining economic growth rate Supply constraints due to the decline in birthrate and demographic aging [1] Improvement of added values [2] Realization of work-life balance Increasing the added value of industries Enhancement of skills development / Utilization of human resources Advancement of innovations Responding to diversified work styles of females, etc. Complementing labour force by AI, etc. (Improving work efficiencies) Increasing options for working style (Realizing employment of those with constraints such as childcare and nursing, etc.) Improvement of labour productivity Elimination of supply constraints Dealing with both as two halves of the whole Realization of economic growth under supply constraints 4

16 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan Current status of economic growth in Japan The GDP growth rate has remained at a low level of less than 1% when compared to other major countries since the 2s. While the contributions of increase in labour and capital inputs are weakening, the TFP increase rate, for which the relationship with the GDP growth rate is becoming stronger, is slowing down. In addition, the TFP increase can be anticipated even where large increase in labour input cannot be expected. (Year 2 = 1) 14 GDP growth rate (avg.) France Germany 1.3 Japan.8 12 U.K. 1.9 U.S.A Transition of the GDP growth rate Germany U.K. France U.S.A. Japan (GDP growth rate) Correlation between GDP and TFP (21-214) y = 1.219x (2.55) R² =.3328 U.S.A. Japan U.S.A. Japan (1986-2) y = -.541x (-.17) R² = (Increase rate of TFP) Breakdown of contribution of added values 3. GDP growth rate Contribution of TFP Contribution of labour input Contribution of capital input s 199s 2s (Increased rate of labour input) Correlation between labour input and TFP U.S.A. Japan (TFP ) y = x (-1.43) R² = (Increase rate of TFP) Source: Prepared based on OECD.Stat (Note) TFP (Total Factor Productivity) refers to growth factors other than capital and labour inputs (e.g., innovations, etc.) when the economic growth is decomposed. 5

17 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan Importance of innovations and status in Japan Realizing innovations is important for improving TFP. When compared internationally, the current status of innovations in Japan is at a low level for both manufacturing and service industries Correlation between innovations and TFP ( ) y =.35x (2.65) R² = Status of realization of innovations Manufacturing industry Service industry All industries (Increase rate of TFP) U.K. France Japan Germany (Percentage of realization of innovations) Germany U.K. France U.S.A. Japan Source: Prepared based on Report on the Fourth Round of the Japanese National Innovation Survey (216), National Institute of Science and Technology Policy (MEXT) (right figure); OECD.Stat (left figure); and Innovation statistics and indicators, OECD (right figure) (Notes) 1) The percentage of realization of innovations refers to the percentage of companies that realized innovations during the reference period: for Japan, for U.S.A., and for other countries. 2) The right figure shows the status of realization of product innovations. 6

18 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan Challenges for realizing innovations The factors in promoting innovation activities include R&D and acquisition of advanced machines, etc. The lack of competent human resources has been an obstructive factor for innovation activities, and making efforts in securing human resources is important Promoting factors for innovation activities (business establishment survey) Obstructive factors for innovation activities (business establishment survey) R&D Acquisition of advanced machines, etc. 33 Education/training for employees 21 Marketing activities 17 Other activities 15 Design activities 14 New utilization of advanced IT services 6 5 Lack of competent employees 61 Pursuit of immediate sales/profits Lack of good ideas Intense market competition Uncertain demand for new products/services Limited technological abilities and know-how 52 Stable orders from the existing customers 48 Difficulty in finding cooperation partners 44 Lack of internal funds Source: Prepared based on Report on the Fourth Round of the Japanese National Innovation Survey (216), National Institute of Science and Technology Policy (MEXT) 7

19 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan Importance of capital investments for realizing innovations The trend toward obsolescence is rising in Japan, and the fact that investments in product development and R&D are small has been a factor obstructing the advancement of innovations. It has been observed that the relationship is such that the more R&D advances, the easier it is to innovate, and advancing R&D aimed at creating new business and enhancing technology platforms is important. (Percentage of realization of innovations) Relationship between the percentage of realization of innovations and obsolescence The obsolescence is low, and the percentage of realization of innovations is high Germany U.K. France The obsolescence is high, and the percentage of realization of innovations is low Japan Capacity enhancement New/advanced products (Obsolescence) Motives for capital investments (company survey) Rationalization/labour saving 4.2 R&D Maintenance/repair Others 199s 2s Relationship between the increase rate of R&D expenses and the percentage of realization of innovations Germany U.K. France U.S.A. Japan Increase rate of R&D expenses 66. Enhancement of existing businesses Percentage of realization of innovations Objectives of R&D Japan 15. Creation of new business and enhancement of own technology platforms U.S.A. Source: Prepared based on National Wealth Survey, Cabinet Office (upper left figure); Report on the Fourth Round of the Japanese National Innovation Survey (216), National Institute of Science and Technology Policy (MEXT) (upper left figure and upper right figure); The R&D Process in the U.S. and Japan: Major findings from the RIETI-Georgia Tech inventor survey (29) (lower right figure) and JIP Database 215 (upper left figure), Research Institute of Economy, Trade and Industry; Survey on Planned Capital Spending Development Bank of Japan (lower left figure); EU KLEMS database (upper left figure); Innovation statistics and indicators, OECD (upper left figure); and OECD.Stat (upper right figure) (Note) The reference period in the percentage of realization of innovations: FY for Japan, for U.S.A., and for other countries. 8

20 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan Importance of utilizing advanced human resources for the realization of innovations In Japan, education/training is not conducted in 6% or more of companies, and promotion of education/training is important for realizing innovations. Utilizing advanced human resources such as graduates from doctoral programs is effective for realizing innovations, but the percentage of these graduates is low in Japan, and recruitment that takes into consideration specialized knowledge and research content has not been accomplished. Relationship between the experience of innovations being obstructed by lack of competent employees and the percentage of implementing education/training for employees Education/training is implemented Education/training is not implemented Yes Experience of innovations being obstructed by lack of competent employees No (Percentage of realization of innovations) Greater importance Relationship between the percentage of graduates from doctoral programs and the percentage of realization of innovations y = x R² =.4571 Japan U.S.A. U.K. Germany (Point) 4 Eagerness/willin gness (Percentage of graduates from doctoral programs) Matters in which emphasis is on recruitment (company survey) Graduates of doctoral 3.2 programs Ability to take action/get things done 2.4 Communication skills Graduates of universities/master s programs Source: Prepared based on Report on the Fourth Round of the Japanese National Innovation Survey (216), National Institute of Science and Technology Policy (MEXT) (left and upper right figure); Questionnaire Survey of Corporate Recruitment and Employee Education (212), Japan Association of Corporate Executives (lower right figure); and Innovation statistics and indicators, OECD (upper right figure) (Notes) 1) The left figure shows the percentage of implementing education/training by counting companies that answered High importance or Medium importance to the question about the degree of importance of the obstructive factor of lack of competent employees for realizing innovations as Yes and those that answered Low importance or No importance as No. 2) The reference period in the percentage of realization of innovations in the upper right figure: FY for Japan, FY for Australia, for Chile, for U.S.A., and for other countries Specialized knowledge/resea rch content.5

21 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan Efforts for effective utilization of human resources Introduction of personnel evaluation based on the R&D results and discretionary labour system is important for the realization of innovations. In introducing such employment systems, efforts such as conducting appropriate personnel management to prevent long working hours are also important. (Increase rate of the probability of realization of innovations) Increase rate of the probability of realization of innovations and concrete measures 18.3 Personnel evaluation based on the R&D results 9.7 Executives originated from R&D sections -.7 Enhancement of researchers authority -3.9 Re-employment of retired researchers Introduction of discretionary labour system and percentage of realization of innovations 37.9 Introduced 22.9 Not introduced Source: Prepared based on Effects of Organizational/Personnel Management in R&D Activities on Innovations (216), National Institute of Science and Technology Policy (MEXT) (left figure) and questionnaire information of Survey on Status of Responding to Innovations (217), The Japan Institute for Labour Policy and Training (right figure) (Note) The numerical values in the left figure indicate the increase rate of the probability of realization of innovations when each measure is implemented. 1

22 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan Changes in workers associated with innovations Industries are becoming more service-oriented in Japan, and by occupation, the percentage of workers engaged in clerical work and specialized/technical work is increasing. The percentage of female researchers remains at a low level when compared to other countries. (Year 197 = 1) Changes in the number of workers/employees (Year 197 = 1) (U.S.A) Changes in the number of workers/employees (Japan) GDP growth rate Workers Employees Population (Population in 21) [197] Transition of the number of workers by occupation Persons engaged in specialized/ technical work 5.8% Persons engaged in security and services 7.6% Persons engaged in sales 13.% [215] Persons engaged in services 12.3% Others 11.9% Persons engaged in clerical work 14.8% Others 24.2% Persons engaged in sales 13.4% Persons engaged in manufacturi ng, production, machine operation, and construction 29.7% Persons engaged in agriculture, forestry, and fishery 17.3% Persons engaged in clerical work 19.7% Persons engaged in production processes 13.9% Persons engaged in specialized/ technical work 16.5% OECD average Italy U.K. France Japan Ratio of female researchers (international comparison) Source: Prepared based on Labour Force Survey, Statistics Bureau (MIC) (middle figure); National Accounts Main Aggregates Database, UN (left figure); and Education at a glance 216, OECD (right figure) 11

23 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan Changes in workers based on skills By skill, polarization is advancing in Japan, and the number of workers in low-skilled occupations is increasing when compared to U.S.A. The reasons for the increase in the number of workers in low-skilled occupations are considered to be the failure to keep up with the IT revolution and the increase in non-regular employment workers due to diversified working styles Changes in the number of workers by skill (Japan) Changes in the number of workers by skill (U.S.A.) (Early stage=1) Difference in GDP in manufacturing industry and information and communications industry between Japan and U.S.A Manufacturing industry Information and communications industry Early stage Middle stage Late stage 5 Percentage of non-regular employment workers by skill High Low High Low High Low Difficulty of skill Difficulty of skill Difficulty of skill Source: Prepared based on Basic Survey on Employment Structure (lower right figure) and Labour Force Survey (left figure), Statistics Bureau (MIC); OECD.Stat (upper right figure); EU KLEMS (upper right figure); IMF stat (upper right figure); and Labor Force Statistics from the Current Population Survey, Bureau of Labor Statistics, US Department of Labor (middle figure) (Notes) 1) In the upper right figure, the early, middle, and late periods of the manufacturing industry refer to 198, 1985, and 199, and those of the Information and communications industry refer to 2, 25, and 214, respectively. 2) Here the occupations requiring complex work are expressed as high skill and those requiring routine work as low skill. 3) The left and middle figures show the increase rate from 1995 to

24 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan Impacts of the advancement of AI, etc. on employment As one impact that AI brings to workplaces, labour productivity is expected to improve through reduced working hours and improved work efficiencies, but only a few companies utilize AI to create new added values. The advancement of AI is expected to change the way of employment, but employees engaged in occupations requiring techniques and human added values, etc. will increase (1, persons) Labour force population Total of all industries Manufacturing Non-manufacturing Impacts of the introduction of AI on workplaces Changes in the labour force population and the number of workers (1, persons) Changes in the number of workers by occupations Engineers Specialized work Creative work Managerial work Clerical post Sales Home helpers, etc. Service Security Agriculture, forestry, and fishery Production processes Transportation, etc. Construction, etc. Cleaning, etc Company survey Employee survey 7.2 Reduced working hours Increased work efficiency Reduced scope of work Possible roles/functions of AI Improving efficiency/productivity of existing work Saving existing labour force Improving values provided by existing work Supplementing insufficient labour force Changes in the number of workers by skill (1, persons) Creating work with new values Occupations requiring techniques Occupations requiring human added values Others, including occupations mainly involving routine work, -386 etc. Increasing motivation to engage in and satisfaction with new work Increasing motivation to engage in and satisfaction with existing work Source: Prepared based on Interim Report on the New Industrial Structure Vision - Japan's Strategy to lead the fourth industrial revolution (216), METI (lower figure); and Estimate of labour force demand and supply - Preliminary Calculations by Prefecture Based on New National Estimate (215 edition) (lower figure), Survey on Status of Responding to Innovations (217) (upper left and upper right figure), and Survey on Working Style for Responding to Innovations (217) (upper left figure), The Japan Institute for Labour Policy and Training (Note) Employee survey in the upper left figure refers to the survey on regular employees

25 Part II Chapter 1: Relationship between Economic Growth and Innovation/Employment in Japan Abilities required for workers in the age of advanced AI The skills required in the age when AI is commonly used include the ability to understand the possibility of AI and make full use of it and communication skills that cannot be replaced by AI, and improving these skills will be important in the future. While both companies and employees do not have much sense of danger about the prevalence of AI, raising their awareness is needed. by humans Jobs needs to be performed 21.8 Jobs unlikely to require communication skills 58.9 Jobs requiring communication skills Skills required in the age when AI is commonly used 71.6 Rudimentary knowledge for correctly understanding the values and possibilities of AI Technological knowledge for correctly understanding the values and possibilities of AI Creativity and design ability to consider the methods of utilizing AI 29.7 Skill for implementing AI in various systems 22.4 Company survey Employee survey Basic skills for reading/writing programs to create AI Advanced programming, design ability, data judgment for searching/pursuing various possibilities of AI Period when AI is introduced in the company Employee survey Company survey Less than 1 years years from now More than 1 years Source: Prepared based on Survey on Status of Responding to Innovations (217) (middle figure and right figure), Survey on Working Style for Responding to Innovations (217) (middle figure and right figure), The Japan Institute for Labour Policy and Training; and The Effects of AI and Robotics on Business and Employment: Evidence from a Survey on Japanese Firms (216), Morikawa (left figure) (Notes) 1) In the left figure, Jobs unlikely to require communication skills refers to driving vehicles, etc. and Jobs requiring communication skills refers to nursery services, medical services, and education, etc. 2) Employee survey in the middle and left figures refers to survey on regular employees. 14

26 Part II Chapter 2: Changes in Environment Surrounding Working Style and Realization of Work-Life Balance Current status surrounding a work-life balance, including long working hours While the number of working hours of full-time workers remains stable, the number of workers working long hours is decreasing, but still remains over 1%. In addition, the percentage of workers working long hours in Japan is high when compared internationally. Transition of work hours (Number of hours) 19 Ratio of part-time workers (right axis) Percentage of workers working long hours (total of males and females) Percentage of workers working long hours (international comparison) 21.9 Percentage of employees working at least 5 hours per week Full-time workers Total of all workers Percentage of workers working at least 6 hours per week among those working at least 35 hours per week Total of OECD member countries Japan U.K. U.S.A. France Germany Source: Prepared based on Monthly Labour Survey, MHLW (left figure); Labour Force Survey, Statistics Bureau (MIC) (middle figure); and OECD.Stat (right figure) 15

27 Part II Chapter 2: Changes in Environment Surrounding Working Style and Realization of Work-Life Balance Changes in environment surrounding working style and increase in number of double-income households With the progress of labour participation of females in the child-rearing generation, the participation rate of females with households is rising, and double-income households are increasing. Female s awareness about employment has changed, and those hoping to work even if their husbands have high income and those willing to continue to work even when they have children are increasing Changes in the employment rate Males Females Males Females Males Females Males Females Total Age 25 to 34 Age 35 to or older Participation rate of females with households Age 45 to 54 Age 25 to 34 Age 35 to or older Less than 2 million Employment rate of wives by income level of the husbands At least 2 million, but less than 5 million Transition of awareness about employment of females At least 5 million, but less than 1 million At least 1 million (Yen) Females should continue to work even when they have children Females should stop working when they have children, and start working again when children get older Females should continue to work until they have children Females should continue to work until they are married Females should not work Source: Prepared based on Public Opinion Survey on a Gender-Equal Society (216), Cabinet Office (lower right figure); and Labour Force Survey (upper left figure and lower left figure) and Labour Force Survey (Detailed Tabulation) (upper right figure), Statistics Bureau (MIC) 16

28 Part II Chapter 2: Changes in Environment Surrounding Working Style and Realization of Work-Life Balance Challenges in balancing work and family Those working longer hours tend not to realize a work-life balance, and husbands/wives in double-income households are more stressed than those in full-time housewife households, and therefore efforts for realizing a work-life balance are important. As the baby boomer generation (those born in ) turns 75 years old in the years to come, the nursing care needs of the baby boomer junior generation (those born in ) who are the bearers of employment will increase. 1 Matching status between expected and actual work-life balance (regular employees) Expected status and actual status do not match Expected status and actual status match 8 Stress conditions of a balance between work and family Being stressed 78.9 (1, persons) 1,8 1,6 Population by age group 75 1, ,2 1, Less than 1 hours 1 hours or more (Daily work hour) Total Wife is a regular employee Males Wife is a non-regular employee Wife is not working (full-time housewife) Total Person herself is a regular employee Females Person herself is a non-regular employee Person herself is not working 4 2 Age 15 to 19 Age 2 to 24 Age 25 to 29 Age 3 to 34 Age 35 to 39 Age 4 to 44 Age 45 to 49 Age 5 to 54 Age 55 to 59 Age 6 to 64 Age 65 to 69 Age 7 to or older Source: Prepared based on Individual/Company Survey on Work-Life Balance (214), Cabinet Office (left figure); 215 Population Census, Statistics Bureau (MIC) (right figure); and National Employment Situation Panel Survey (216), Recruit Works Institute, Recruit Holdings (middle figure) 17

29 Part II Chapter 2: Changes in Environment Surrounding Working Style and Realization of Work-Life Balance Effectiveness of efforts to realize a work-life balance It has been observed that the relationship is such that the shorter the working hours, the higher the labor productivity, and therefore reducing working hours is important. By advancing efforts to realize a work-life balance, increased income and lower turnover rate can be expected. (Labour productivity) (Yen) 8, 7, 6, 5, 4, 3, Relationship between work hours and labour productivity (by prefecture 213) Osaka y = -6.66x (-4.3) (6.2) R² =.293 Tokyo Okinawa Sales by status of receiving certifications/awards, etc Turnover rate by status of receiving certifications/awards, etc , 1 2 1, 1 1,6 1,7 1,8 1,9 2, (Number of hours worked) (Number of hours) Decreased Yes Increased Decreased No Increased Yes No Source: Prepared based on Monthly Labour Survey (Prefectural Survey), MHLW (left figure); System of National Accounts, Cabinet Office (left figure); and questionnaire information of Survey on Effects of Companies Employment Management on Business Operations (215), Mitsubishi UFJ Research and Consulting (middle figure and right figure) 18

30 Part II Chapter 2: Changes in Environment Surrounding Working Style and Realization of Work-Life Balance Effective efforts to reduce long working hours Many efforts have been taken to reduce long working hours, but the actual effects are limited. Although companies that reduced long working hours have taken such efforts as understanding the actual conditions, efforts that are considered effective such as placing a high value on performing high quality work in shorter hours and establishing a system that allows substituting work have not been sufficiently implemented, and therefore implementing these efforts in addition would be more effective. Efforts to reduce overtime work hours No (6.8%) No answer (.6%) (Of companies that answered Yes ) Reduced Effectiveness (actually reduced or not) Yes (92.6%) No change (including not sure ) Content of concrete efforts of companies that reduced overtime work hours Understandingactual situations (actual work hours, etc.) Alerting and providing advice to workers working long hours and their superiors Reviewing the content/division of work Introducing an advance notification system for overtime work Grantingcompensatory days off for working on holidays Establishmentof no overtime work days Securing appropriatepersonnel Raising awareness by encouragement from the top management and introducing business strategies Promotingthe utilizationof non-regularemployees and outsourcing No answer Efforts that workers consider effective in reducing overtime Effective efforts Efforts actually taken Difference between effective efforts and efforts actually taken Provision of trainingand raisingawareness on work hour management and health maintenance for managers Holding discussions at committees, etc. Announcing closing time via public address system, etc. Provision of trainingand raisingawareness on work hour managementand healthmaintenancefor nonmanagers Mandatorylights-off andpower off of all PCs at once Others No answer Placing a high value on performing high quality work in shorter hours Establishing a system that allows others to work in substitution when the persons in charge are absent Prohibiting meetings outside of office hours System in which superiors who have reduced long working hours of their subordinates are highly evaluated Punishments/penalties to superiors who have allowed long working hours Limiting the time and number of meetings (setting the upper limit to one hour, etc.) Mandatory lights-off in offices Reminding by superiors Establishing scheduled no overtime work days Introducing a management system of entering and leaving time, and alerting Source: Prepared based on Individual/Company Survey on Work-Life Balance (214), Cabinet Office (lower right figure); and Survey on Working Hours Management and Efficient Work Styles (215), The Japan Institute for Labour Policy and Training (upper figure and lower left figure) 19

31 Part II Chapter 2: Changes in Environment Surrounding Working Style and Realization of Work-Life Balance Status and Efforts of balancing housework/child care and work There is almost no difference in the number of hours husbands spend in housework between double-income households and full-time housewife households. The percentage of males wishing overtime work hours to be reduced so that they can engage in housework/child care is high, mainly among workers working long hours. Many people are willing to cooperate with those raising children while working, and therefore asking people around in workplaces, etc. for support is effective. Double-Income households Full-time housewife households Number of hours husbands and wives spent in housework by household attribute (Minute) Husbands Wives Husbands Wives Matters considered necessary to engage in housework/ child care (males/regular employees) (by work hour) Reduced overtime work Leaves that can more easily be taken Improved communication with one s spouse More flexible personnel assignment in workplaces Less than 1 hours At least 1 hours, but less than 12 hours 12 hours or more Persons dissatisfied with 12 hours or more Improved skills in housework/ child care Awareness about supporting those raising children while working (Percentage of those who answered that they are willing to support) Supporting coworkers at workplaces Supporting neighbors and people in communities Source: Prepared based on Individual/Company Survey on Work-Life Balance (214), Cabinet Office (middle figure); Survey on Time Use and Leisure Activities (211), Statistics Bureau (MIC) (left figure); and 7th Survey on Working Life (215), The Japan Institute for Labour Policy and Training (right figure) 2

32 Part II Chapter 2: Changes in Environment Surrounding Working Style and Realization of Work-Life Balance Effects of new work styles utilizing information technologies While new work styles associated with technological revolutions are drawing attention, promoting the introduction of new work styles utilizing information technologies such as telework is expected to contribute to the improvement of labour productivity and realization of a work-life balance. Telework, which has been broadly spreading, is advantageous for both companies and workers in improving work productivity, reducing stress, and securing family communications, etc. 32 Percentage of increased use of IT technologies in the last 3 years Introduced Status of introducing telework Not introduced, but have concrete plans to do so Overall total With high labour productivity Effects of promoting labour participation utilizing information technologies Advantages of telework 4 2 More diverse work styles Improved labor participation rate of the existing employees Readjustment of organization and personnel assignment (consolidation of the work with higher added values, etc.) Improved satisfaction and motivation of employees Acquisition and sharing of knowledge/know-how Recruitment of new employees 12.9 Increased work hours 9.1 Improved relationships with external interested parties (inside and outside the industry, domestic and overseas, etc.) 4 2 Improved productivity/efficiency of work Source: Prepared based on Study Report on a Structural Analysis of the ICT Industry in the IoT Era and Verification of ICT s Multifaceted Contributions to Economic Growth (216) (lower left figure) and FY215 Communications Usage Trend Survey (upper right figure), MIC; and Survey on Working Hours Management and Efficient Work Styles (215) (upper left figure) and Results of Study on the Actual Situation of Diverse Work Styles Using Information and Communication Devices (214) (lower right figure), The Japan Institute for Labour Policy and Training 21 Less commuting burden Improved customer services Less stress and more peace of mind 1. More family communications

33 Part II Chapter 2: Changes in Environment Surrounding Working Style and Realization of Work-Life Balance Interest in flexible work styles utilizing technological innovations and their effects [1] There is a high interest in working styles enabling people to work whenever and wherever they choose, and the number of people choosing working styles without being employed utilizing information technologies is increasing. By income level, those with low income are relatively large in number, but there are a certain number of those with high income. (1, persons) Number of business operators utilizing information communications technologies with no employees 5 Females Males (1, persons) Income distribution of business operators utilizing information communications technologies with no employees Less than 1 million 1 to 1.99 million 2 to 2.99 million 3 to 3.99 million 4 to 4.99 million 5 to 5.99 million 6 to 6.99 million 7 to 7.99 million 8 to 8.99 million 9 to 9.99 million At least 1 million (Yen) Source: Prepared based on FY27 Basic Survey on Employment Structure and FY212 Basic Survey on Employment Structure, Statistics Bureau (MIC) 22